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Noble seems to be facing a credibility issue

The Edge Singapore
The Edge Singapore3/5/2018 08:00 AM GMT+08  • 4 min read
Noble seems to be facing a credibility issue
SINGAPORE (Mar 5): Commodities supply chain manager Noble Group needs to take more seriously the criticisms that have been levelled at it. On Feb 27, investor Goldilocks Investment Co released a statement that raises some concerns about what Noble has bee
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SINGAPORE (Mar 5): Commodities supply chain manager Noble Group needs to take more seriously the criticisms that have been levelled at it. On Feb 27, investor Goldilocks Investment Co released a statement that raises some concerns about what Noble has been telling the market.

Among other things, Goldilocks highlights the significant non-cash losses of US$1.5 billion ($1.98 billion) to US$1.6 billion that Noble guided it would report for 4QFY2017 ended December. Some US$0.9 billion to US$1 billion of these losses came from the application of additional valuation adjustments and provisions within Noble’s mark-to-market derivatives portfolio, the result of an increase in the discount rate used.

“This seems to suggest that Noble has consistently overstated the value of its derivative contracts over this financial year,” says Goldilocks. “It also leads one to question why these adjustments were not made earlier, given that Noble already revised its valuation approach to its commodity contracts and derivative instruments on several occasions in 2017.”

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